From the words of Porsche North America’s CEO Detlev von Platen: “Our entry model is our pre-owned program.” Damn. My initial reaction was a bit strong:
I have a few good reasons for that frustration! I’ve grown up around Porsches; I have enjoyed my 944, the 914 we had in the family when I was old enough to drive, and I want to buy another Porsche sometime soon. I have a couple things in the way right now: a new baby girl, and a day job that doesn’t make six figures (yet!), so I’m not really able to sign off on that 981 Cayman S this week. I was really looking forward to a new entry model for 2020. That Porsche would declare their used market an entry-level vehicle might have serious ramifications for the enthusiast community.
Was PCNA’s CEO Thinking Clearly When He Said It?
I hope he wasn’t – because that position indicates either indifference or ignorance, unless he was dissembling which is another story altogether, and I can’t say Porsche has ever been indifferent to their customers. For a minute, let’s table the discussion about whether this decision shows commitment to not diluting the brand; let’s table the discussion about whether it’s appropriate for Porsche to even throw a furtive glance at any market with the word “entry” in front of it.
A Quick Look At Entry Level Vehicles
It may be a bit of marketing 101, but bear with me and let’s talk about entry-level vehicles. An entry model is not a flagship. It’s not supposed to have the extra features, the gobs of horsepower, the poshness of a top-of-the-line model. Entry models are handshake cars, meant to convey the spirit of the brand, even at a lower price point. It’s supposed to be reliable enough and engaging enough to satisfy a customer’s needs through the life of the vehicle. When they want or need something new, and their first experience with a company’s car was positive, customers will typically try to buy from them again. Entry model cars are always a cost to consumers, but they can also be an investment by the manufacturers. Manufacturers create entry models to entice buyers to stick with them as they drive through life.
Generally speaking here, an entry-level price also means entry-level performance, in exchange for a more reliable car, which makes the total cost of ownership more affordable – hence, entry level. Let’s bring Porsche into the discussion again.
There are some exceptionally great deals for used Porsches. Need a family car? A 2004 Cayenne Turbo used to cost over $110,000, or more, with options. Now, with 60,000 more miles and ten years, it’s less than $25,000.
2000 Boxster? Those used to be $50-60,000 with the right options. This one can be yours for less than $15,000. 42,000 miles covered in 14 years.
Better yet, what about a nice 964? The Carrera 2 coupes were about $55,000 back in 1991 (Adjusting for inflation, that’s a little over $96,000 spending power of today’s dollar)… but for only $24,000 2014 dollars, you can get this striking white over blue coupe (sigh, sadly with only two pedals!)! It looks like it needs a bit of work, and with 141,000 miles, that sentiment is probably more true than the seller would care to admit.
When you’re looking for an entry-level sports car, like the Volkswagen GTI, or the BMW 228i coupe, or the Subaru BRZ, these cars are competitively priced! That Boxster costs about half as much as an entry-level BMW coupe – what a deal!
Again, entry-level considerations are pervasive throughout the ownership experience – the purchase of the vehicle is only one component. Look at that 2004 Cayenne Turbo up there. You think that 4.5 liter, 500 horsepower motor comes with entry-level maintenance costs? Absolutely not! You’re buying a $25,000 car, but you’re maintaining a $110,000 car! That means this car is way outside the budget for someone looking for a $25,000 car, unless the buyer is a shortsighted idiot (having bought a Porsche partially because it was going to cost the same as a used Accord, I can resemble that insult).
Smart Buyers Know That The Price Of The Car And The Cost Of Ownership Are Considerations To Make Prior To The Purchase.
So for smart, up-and-coming folks looking to buy in to the Porsche brand, but can’t afford the $60,000 Boxster, much less the $90,000 Carrera (Yes, I know those retail for $51,400 and $84,300 respectively, but add taxes and title fees and the fact that very few of these cars leave with ZERO options… I’ll stick with my prices.), what are their options? A $29,000 996 C2S with over 100,000 miles? One IMS failure and they’ve almost doubled the amount of money put into that car. How’s that for a hearty Porsche handshake? “Welcome to the brand! Our cars are much less hassle when you can buy them new.” Can Porsche hang their hat on a used market for “entry-level” cars? I don’t think so. They’re trusting Porsche owners, former Porsche owners, the children of Porsche owners (who sneak the car out for a weekend drive), snarky valets – and more – to take care of a 5, 10, 20 year old car that will provide a great first experience for new Porsche owners. That business model is more risky business than a 928 driver’s seat molded to fit Tom Cruise’s butt cheeks.
If the used price and cost of ownership is comparable to the price of a new car, it’s going to be hard to get lifetime customers. By that, I should clarify, new purchases from lifetime customers. You want to talk about fear of diluting a brand? What happens to all the classic Porsche models – not the rare ones like speedsters or 993 turbos, mind you, just any older Porsche – what happens to the condition of our used market, when the entryway to Porsche ownership is perpetually littered with buyers who can’t afford to maintain the vehicle they’re acquiring, and sellers who can’t afford to fix what went wrong? I fear the quality of the used market will suffer horribly over the next few decades. Cars in good condition will become scarce, inflating their values, building up steeper walls between Porsche ownership and – merely driving.
How Will It Affect Enthusiast Numbers?
I believe that level of exclusivity will certainly keep folks out unless they’re of a certain net worth. How will it affect enthusiast numbers? For altogether different reasons (I can’t stress that enough!), the hot-rod enthusiast community has been experiencing a severe downturn in events and numbers because of certain expectations with ownership. As a result, the only folks who have those old modified classics are the same guys who owned them fifteen, twenty years ago – a group who, inexplicably, seem to be dying out. Without a realistic entry into the Porsche lifestyle, I wonder if the average age of Porsche owners will spike up in the next fifteen years if they continue to maintain this path.
I myself have seen the winds change. Five years ago, I was unmarried, working fresh out of school and looking at 1990 Carrera 2 prices because I wanted to upgrade from my 944. Carrera 2 examples around 100,000 miles were selling near $15,000. Marriage, finding a new job, buying a house, having a baby, and five years later, I look up the same car and prices have almost doubled. Sure, I’ll keep making more money, and I’ll eventually find a 964 that suits me, but my path forward with Porsche ownership now presents decidedly fewer choices. If the pre-owned program remains Porsche’s entry-model of choice, I fear that trend will continue to worsen.
Is that too crazy? Am I missing something? Am I putting way too much value in a passing quote from Porsche? What’s your position on this!
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View Comments (9)
Porsche have declared my 1999 Boxster a "classic" and typically that moniker adds credibility, desirability and value to a car, but none of those apply to an old Boxster and this arrogant statement didn't help the situation any.
I didn't buy my ten year old '99, with 74K miles on it, as an investment but it would be reassuring to know that Porsche thinks about it as something more than a cheap way to drive a Porsche, after all it was the model that kept them from bankruptcy.
Was PCNA's CEO thinking clearly when he said Porsche's entry model is its pre-owned program? Perhaps Mr. von Platen's background and Porsche's recent marketing success with 4 door vehicles (Cayman, Macan, Panamera) are the reasons underlying his statement, but they reflect some shortsightedness about the brand and what it has meant to enthusiasts since 1948. As the owner of three 911's (2 classics, and one 997), I was hoping that Porsche would go forward with an entry level car, one that is smaller and lighter than it's current model line-up and offering less "frills" (yes Porsche, sometimes less is more!) and gadgetry than the Boxster, Cayman or 911. After all, Porsche did not gain its reputation as a company by making large, over the top, ultra expensive cars. Instead, its focus had been on handling and engineering, all as part of a light, strong package. Proof that such performance first cars are still welcome by enthusiasts is evidenced by the fact that cars such as the 1993 RS America, as well as the more recent Boxster Spyder, sold out their entire production, and could have sold in even greater numbers. Something that takes us back to the days of the 356 and early 911's would be most welcome to Porsche enthusiasts and owners as an entry level model and is sure to sell well.
Porsche has responded periodically to the "entry level" conundrum - the 356 Speedster being the best example at about 2/3 the price of a 356. That type of vehicle is probably impossible now due to regulations and production difficulties despite computerized robot construction. If even possible to provide, would enough people want to purchase the flimsy side curtains, frustrating roadster tops, no air conditioning, no radio, cheap seats, etc.? And for how much - $35-40,000? That's MX5 territory, but with all the comforts and decent performance. Even a fast Ariel Atom or Caterham costs more than that.
In terms of price point, Porsche's current approach, with the $51K Boxster at the bottom of its lineup, is consistent with its history. A brand new 924 would set you back $9,395 back in 1976, the equivalent of $39.3K today using the Bureau of Labor Statistics' CPI Inflation Calculator. Add to that the cost of government-mandated equipment and technological improvements since 1976 (ABS, traction control, air bags, electronic engine management, direct-injection, TPMS, etc.) and it's not hard to bridge the remaining $12K gap.
And not to be a snob, but there is something to be said for exclusivity. Perhaps it's not apples-to-apples, but I doubt that this debate comes up much on the various Ferrari message boards. [This coming from one whose first Porsche was a used Boxster, the second a new Cayman; I'm currently between Porsches and suffering for it.]
All of that said, Porsche may not have a choice but to introduce a fuel-sipping 4-banger Boxster given where CAFE standards are going. Or maybe a diesel-powered Cayman...?
Looking at the issue objectively Porsche may have the same problem that Cadillac recognized several years ago. The average age of a Cadillac buyer then was 62. GM realized that in a few years there would be very few , if any buyers of the brand.
With the pricing on new Porsches hovering around the 6 figure mark (yes Boxters and Caymans fall under that bar...only slightly) Porsche may have a conundrum. Porsche indicated two years ago that it wanted to sell 100,000+ units per year. With the pricing of product as it is this not a high probability occurrence. Also younger buyers of the car cannot afford to buy a Porsche of any configuration due to family (ok Cayanne and Cayanne Jr) issues, income, etc.
If you survey most PCA members, the Porsche or Porsches they own are "extra" cars, not front line daily drivers. Without youth (30-45) involved the brand may have issues regarding meeting sales quotas.
Ignoring the insensitivity of the remarks it appears that they are out of touch
"Entry Level" Porsche. The 914 was a PIA to work on and they always needed a good bit of maintenance. They sold a bunch of them in spite of the VW overtones. Still, a fun car to drive.
However, the 924/944/968 series began as the mongrel VW/Audi offshoot and grew into a rather top shelf sports car that could equal or surpass the vaunted 911 Tubos as in the 968 Turbos. Very cool cars that died too young. Sales figures dropped badly while the price kept going up. There were so many 944s sold worldwide that if kept the company afloat and bankrolled the foundations for the reborn 911 series. I still have two early ones, but one is a driver that seldom gets driven and the other is a viable parts source (used Porsche, parts car included)
The price and profitability of the company today owes a lot to the time when the 944 was just a little bit pricey but extremely cool and competent, not to mention popular. With all models moved upscale, the true entry level Porsche HAS become a used one.
I don't particularly approve of the current business plan, but sales are up, so I certainly can't call it a bad plan. Moving away from the pure car into the pure tech cars has worked, and the market is pretty cut throat.
Porsche doesn't NEED a lesser model, currently, could hardly make use of it. Even if a certain class of consumer might appreciate the effort. Besides, I doubt they could build a car to a price point that would truly be ENTRY level and preserve the sheer cutting edge image they have worked very hard to achieve. I might park my Z3 #.0 for a 968, but the 968 doesn't quite drive as well as the Z3/Z4s do. Updated 968, I would snatch one up if it didn't require a second mortgage.
I have owned 5 Porsche cars. A new 1971 914...a new 1974 911 (for 29 years)...a used 1999 996 Tip...a new 2004 911 40th Anniversity Edition( bought when Porsche reduced the prices by 25%) and now a used 2005 911. I don't think I would ever by a new Porsche again...and this is Porsches fault. Let me explain...Porsche makes more money per car then any other company...an average of almost $24,000 per car. If they cut that in half they could bring in a lot of new buyers to the current new cars.
All I know is that every time I get into my car...and drive even a few miles...I smile!
The quote, I believe, referred to their "preowned program" which is not the same as cars that have been driven (and perhaps ruined) by the prior owners. In other words, a lot of the problems you think the next owner may confront which will spoil him on the brand are probably not gonna happen because the cars have been certified.
My "entry-level" Porsche was a 1971 911 T Targa that I purchased in 1978, paying about what the car had cost new ($8,500). After 3 years, I sold it for $8,000 having added 50K miles to the 15K on it when purchased. Twelve Porsches later, I have never felt beaten up when I sold a car and count the experiences gained in roughly 750K driving miles as priceless. As Porsche doesn't seem to have any trouble producing just what they can easily sell, there is no economic incentive for a lower-priced, entry-level product. The CPO avenue provides the new Porsche owner with a reduced risk, reduced cost of entry product (and the demand for such helps support the asking price for new Porsches making the shareholders happy).